Auditor issues unmodified opinion on Lackawanna County—s 2023 financial statements; general fund balance rises

Tim Meara, partner with Zelenkowski Axelrod, LLC, told the Lackawanna County Board of Commissioners at a public caucus that the firm issued an unmodified opinion on the county—s 2023 financial statements and found no internal control deficiencies requiring reporting.

The audit report shows the county—s governmental activities ended 2023 with a net position deficit of $76,800,000, a $16,700,000 improvement from 2022, Meara said. The general fund—s total fund balance rose to $19,800,000 in 2023, an increase of $3,900,000 from the prior year, driven by lower expenditures and other financing activity.

Those figures are reflected in the audited statements and supporting schedules cited by Meara; the auditor said the county—s financial statements "are fairly presented in all material respects in accordance with accounting principles generally accepted in the United States of America." He also said there were no management-letter issues identified during the audit.

Why it matters: Meara said the improved fund balance and more timely audit completion enhance how the county appears to rating agencies and lenders. "If we continue on this path, the 2024 audit will look better in the eyes of the rating agencies," Meara said, describing the overall trend as positive.

Key details from the audit presentation

- Audit opinion and internal controls: Meara said the firm issued an unmodified (clean) opinion on the county—s financial statements and did not identify reportable internal control deficiencies.

- Net position and drivers: The county—s governmental activities showed a $76.8 million net position deficit. Meara attributed the $16.7 million year-over-year improvement primarily to a reduction in expenditures; revenues were roughly flat year to year. He noted a net pension change and long-term debt activity as material items affecting net position.

- Debt and capital: The county issued about $25,600,000 in general obligation bonds and notes in 2023 and recorded approximately $12,000,000 in principal payments; most of the bond proceeds remained unspent at year end and are reflected in the capital projects fund.

- General fund and other funds: The general fund reported $123.1 million in revenues (about $24.3 million under budget, a figure Meara said is affected by transfers) and $119.2 million in expenditures (about $5.7 million under budget). The resulting $3.9 million increase produced an unassigned general fund balance of approximately $16.7 million. The debt service fund ended 2023 with a $1.9 million deficit. The capital projects fund held $26.4 million at year end, up about $25.9 million largely because 2023 bond and note proceeds were recorded there.

- Pension trust: The county—s pension trust reported a net position of $200.1 million at year end, an increase of $18.7 million year over year, driven primarily by market gains and contributions.

- Accounting standards and upcoming changes: Meara said three Governmental Accounting Standards Board (GASB) pronouncements were noted in footnote 18 of the audit report and that they did not materially affect 2023 results. He also told the commissioners that the county will need to evaluate GASB guidance in 2024 related to compensated absences and accounting changes.

County staff and commissioners respond

Commissioner Bill asked whether a public presentation of the audit is a common practice; Meara replied, "I think it's a mix. Some counties will have just a meeting, a private meeting with the commissioners and chief clerk and finance staff. Others want it presented. I think it all it all depends. It's not a one size fits all." (Speaker identified in the meeting as Bill.)

Commissioners and county finance staff also discussed timeliness. Meara credited improvements in 2023 to added staff and a consultant: "Between the consultant Bob and Dave working together, a lot of the information, the timeliness of responses and such, was fantastic," he said, referring to consultant Bob Dean and Chief Financial Officer Dave Bolzoni.

Dave Bolzoni, the county—s chief financial officer, said the presentation provided a useful overview and that staff had already reviewed details with the auditor. "I think Tim did a very good job providing an overview of the results," Bolzoni said at the caucus.

Next steps and context

Meara said the county and audit firm will work together to implement the 2024 GASB requirements and that the audit team hopes to complete the 2024 audit in a timelier fashion. With no formal votes taken at the caucus, no board action was required; the caucus was informational and adjourned at the end of the presentation.

Adjournment: The public caucus concluded after the presentation and follow-up questions and was formally adjourned by the meeting chair.